PALOS VERDES ESTATES, Calif., April 15, 2019 (GLOBE NEWSWIRE) -- Malaga Financial Corporation (OTCPink:MLGF), the parent company of Malaga Bank FSB, today reported that net income for the quarter ended March 31, 2019 was $3,457,000 ($0.50 basic and fully diluted earnings per share), a decrease of $392,000 or 10% from net income of $3,849,000 ($0.56 basic and $0.55 fully diluted earnings per share) for the quarter ended March 31, 2018. For the first quarter of 2019, the Company's annualized return on average equity was 10.05% and the annualized return on average assets was 1.26%, as compared to 12.03% and 1.48%, respectively, for the same period in 2018.
The Company did not have any delinquent loans or foreclosed real estate owned at March 31, 2019. The Company's allowance for loan losses was $3,241,000, or 0.32% of total loans, at March 31, 2019.
Net interest income totaled $7,955,000 in the first quarter of 2019, a decrease of $177,000 or 2% from the first quarter of 2018. This resulted from a decrease in the interest rate spread from 3.11% to 2.86%. The decrease in the interest rate spread is primarily attributable to an increase of 0.47% in yield on average interest-bearing liabilities offset by an increase of 0.22% in yield on average interest-earning assets.
Operating expenses increased 3% in the first quarter of 2019 to $3,159,000 from $3,062,000 in the first quarter of 2018. Increased costs were primarily related to compensation expenses.
Randy C. Bowers, President and CEO, commented, "We are generally satisfied with our 1st Quarter performance in an increasingly difficult environment. Fierce competition for deposits and continued flattening of the yield curve have resulted in additional pressure on our interest spread. We have been successful in partially offsetting this trend with increased growth in our loan portfolio. Capital levels are strong, quality remains excellent and our efficiency ratio continues to be one of the best in the industry. We look forward to continuing to execute our strategy in 2019 and appreciate the contributions of our colleagues and support of our shareholders."
Malaga's total assets increased by 7% to $1.117 billion at March 31, 2019 compared to $1.047 billion at March 31, 2018. The loan portfolio at March 31, 2019 was $1.020 billion, an increase of $52 million or 5% from March 31, 2018. Malaga originates loans principally for its own portfolio and not for sale.
Malaga funds its assets with a mix of retail deposits, wholesale deposits and FHLB borrowings. Retail deposits totaled $660.2 million as of March 31, 2019, a $328,000 increase from $659.9 million at March 31, 2018. Wholesale deposits, comprised mainly of State of California certificates of deposit, totaled $96.9 million as of March 31, 2019, a $182,000 increase from $96.7 million at March 31, 2018. FHLB borrowings increased $55 million or 39% from $142 million at March 31, 2018 to $197 million at March 31, 2019. The increase in FHLB borrowings was used to fund increase in loans.
As of March 31, 2019, Malaga Bank was in compliance with all applicable regulatory capital requirements and was deemed "well-capitalized" under applicable regulations. Core capital and risk-based capital ratios were 13.68% and 24.07%, respectively, at March 31, 2019, significantly exceeding the minimum "well-capitalized" requirements of 5% and 10%, respectively.
Malaga Bank, a subsidiary of Malaga Financial Corporation, is a full-service community bank headquartered on the Palos Verdes Peninsula with six offices located in the South Bay area of Los Angeles. For over ten years Malaga Bank has been consistently recommended by one of the nation's leading independent bank rating and research firms, Bauer Financial Inc.Malaga Bank was awarded their premier Top 5-Star rating for the 45th consecutive quarter as of December 2018. Since 1985 Malaga has been delivering competitive banking services to residents and businesses of the South Bay, including real estate loan products custom-tailored to consumers and investors. As the largest community bank in the South Bay, Malaga is proud of its continuing tradition of relationship-based banking and legendary customer service. The Bank's web site is located at www.malagabank.com.
President and Chief Executive Officer
Malaga Financial Corporation
Source: Malaga Financial Corp.